Sainsbury's has confirmed that it has agreed terms with Walmart to merge with Asda.

The UK's second and third biggest retailers are set to announce further details of their £15 billion merger this morning.

Both brands will stay while the operations will be merged - pooling resources. Sainsbury's said there are no planned store closures.

In good news for consumers, Sainsbury's said the move would mean a 10 per cent drop in the prices of prodoucts which are bought most regularly.

Asda owner Walmart will hold 42 per cent of the business and will get £2.97billion in the deal.

The merger values Sainsbury's at £5.9billion and Asda at £7.3billion.

The move aims to make cost savings of £500million. David Tyler, Sainsbury's chairman, said: "We believe that the combination of Sainsbury's and Asda will create substantial value for our shareholders and will be excellent news for our customers and our colleagues.

"As one of the largest employers in the country, the combined business will become an even greater contributor to the British economy.

"The proposal will bring together two of the most experienced and talented management teams in retail at a time when the industry is undergoing rapid change."

The announcement comes as calls grow for the potential deal to be subject to scrutiny by the competition watchdog.

The duo admitted on Saturday that they were in advanced talks over a merger which would create a new supermarket giant with more than £50 billion in sales.

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If it goes ahead, the combination will create a high street titan with a bigger share of the market than Tesco.

Further details on the potential merger were published at 7am this morning.

Sainsbury's chief executive Mike Coupe has been in an acquisitive mood recently, having led a £1.4 billion takeover of Argos in 2016.

But a deal with Asda would represent a massive step up in scale and complexity.

The merger would have to be approved by the Competition and Markets Authority (CMA).

Liberal Democrat leader Sir Vince Cable, the former business secretary, said the CMA "must investigate" any deal after it emerged the companies were in advanced talks.

Shadow business secretary Rebecca Long-Bailey echoed Sir Vince's calls, warning the merger risked "squeezing what little competition there is in the groceries market even further".

Sir Vince said the CMA should force the companies to sell off stores if the merger meant the new giant was dominant in a particular area, telling the watchdog's new chief, Andrew Tyrie, to "get tough with monopolies".